WSSDA Legislative Update

Legislative Update April 11, 2012

By Marie Sullivan, WSSDA Director of Governmental Relations Legislature wraps it all up with a bow WSSDA Legislative Links After the Governor declared a second special session shortly after midnight, negotiators again went behind closed doors to hammer out the last details on policy and budget bills.

Legislators, lobbyists and staff were exhausted as the sun began to rise, but both chambers Our Priorities and Positions kept the momentum going by passing bills. Around 7:30 a.m., lawmakers adjourned sine die Legislative Updates/Reports for the second time in 24 hours.

Legislature passes K-12 health benefits bill Legislative Events After days and hours of negotiations, the Senate took the first step in reforming health benefits for K-12 employees. At about 4:30 a.m., by a vote of 25-20, the Senate passed ESSB 5940. Legislative Committee

The bill was immediately transmitted to the House, which went into caucus after passing Federal Relations Network 3ESHB 2127, the supplemental operating budget. The House passed the bill 53-45 just before

6 a.m. Legislative Resource Links During the interim, school districts participated in the Health Care Authority advisory group and supported the recommendations of the December report for a consolidated health WSSDA Home benefits system that had:

 The opportunity for school district savings;

 More uniformity of benefits through a state-operated system;

 More transparency and access to data for school districts and decision makers alike;

 Shared premiums by all employees; and

 Equity between employees and families without increased costs to districts.

To reach these objectives would have been tough in any year. But with a short session and the enormous pressure against moving K-12 employees to a consolidated health benefits system exerted by the Washington Education Association, insurance providers, and other related industries, the bill was drafted and redrafted on a regular basis. (Rep. Pat Sullivan, D- Covington, said he hadn’t seen so many versions of a bill in his eight years as a legislator.)

Here are the main components, as passed the Legislature today:

 All employees in pooling arrangements who choose medical benefit coverage must pay a minimum premium, subject to collective bargaining.  Employees who choose a “richer” benefit plan must pay higher premiums.

 School districts that offer medical, vision and dental benefits are required to:

1. Offer a high deductible health plan option with a health savings account;

2. Make progress toward employee premiums in which the full family coverage is not more than three times the premium for an employee purchasing single coverage for the same coverage plan (with one exception); and

3. Offer at least one health benefit plan in which the employee share of the premium cost for a full-time employee does not exceed the share of premium cost paid by a state employee.

4. In addition, school districts must use an open competitive process to purchase services, except where an open process would compromise cost- effective purchasing; and

5. Make progress on promoting health care innovations and cost savings, including significantly reducing administrative costs.

 Reporting on health benefits information is expanded from current law, and failure to report would trigger penalties, described at the end of this summary. School districts and their benefit providers would be required to annually report information and data to Office of the Insurance Commissioner (OIC) for the prior calendar year. Elements include:

o Progress toward greater affordability for full family coverage, health care cost savings, and significantly reduced administrative costs;

o Offering a high deductible health plan option with a health savings account;

o A plan summary, which would include:

. The financial plan structure and overall performance of each plan, including total premium expenses, total claims expenses, claims reserves, and plan administration expenses, including broker fees.

. A description of the plan’s use of innovative health plan features;

. Data to help external audiences understand employee health benefit plan coverage and costs, including the total number of employees and, for each employee, the employee’s FTE status, types of coverage or benefits received, number of covered dependents, the number of eligible dependents, the amount of the district’s contribution to premium, additional premium costs paid through the employee’s payroll deduction, and the age and sex of the employee and each dependent.

. Data to help districts more effectively and competitively manage and procure health insurance plans for employees. Information must include:  a summary of the benefit packages offered to each group of district employees, including covered benefits, employee deductibles, co-insurance and co-payments, the number of employees and their dependents in each benefit package;

 aggregated employee and dependent demographic information, including age band and gender, by insurance tier and by benefit packages; total claim payments by benefit package, including premiums paid, inpatient facility claims paid, outpatient facility claims paid, physician claims paid, pharmacy claims paid, capitation amounts paid; and other claims paid;

 total premiums paid by benefit package;

 a listing of large claims (more than $100,000), including the amount paid, the member enrollment status, and the primary diagnosis

. A description of how districts are reducing administrative costs, improving customer service, reducing the differential plan premium rates between employees only and family health benefit premiums, and protecting coverage for part-time K-12 employees.

 All of the school district and benefit provider data and information will be compiled by the OIC, who will submit a report to the Governor, the Legislature, and the Health Care Authority on an annual basis by December 1, beginning in 2013. The report will include a summary of each school district’s health insurance benefit plans and each district’s aggregated financial data and other submitted information as described above.

o OIC may adopt rules to meet the reporting requirements.

o The OIC is required to consult with school district representatives on the reporting.

 By June 1, 2015, the state Health Care Authority must report to the Governor, Legislature and the Joint Legislative Audit and Review Committee (JLARC) information, based on two years of school district reports on health benefits.

o HCA will establish a specific target to reach the goal of greater equity between full family coverage and employee only coverage on the same benefit plan. HCA will consider the appropriateness of the 3 to 1 ratio or alternatives.

o HCA will also study and report the advantages and disadvantages of:

. Whether better progress on legislative goals could be best achieved through consolidation of school district health insurance purchasing through a single, consolidated school employee health benefits purchasing plan;

. Whether better progress would be achieved by using the PEBB, and if that would be preferable to creating a separate system;

. Whether certificated or classified employees, as separate groups, would be better served by purchasing health insurance through a single consolidated school employee benefits plan or participation in PEBB; and

. An analysis of the implications of various options on costs to the state and school employees, impacts for existing purchasing programs, and a proposed timeline for implementation.

 By December 31, 2015, JLARC must review the school district reports submitted by OIC, and make its own report on the progress school districts and their benefit providers are making in achieving legislative goals of transparency, equity, and affordability. JLARC is also directed to review and make recommendations on the value of alternative health benefit purchasing systems for K-12 school employees.

o The Legislature is directed to take all steps necessary to implement the recommendations of JLARC unless the Legislature adopts alternative strategies to meet its goals during the 2016 session.

 The bill also includes an incentive for school districts to comply with the requirements. In Section 7(4)(a), JLARC is authorized in the 2015-16 school year to determine which school districts have met the legislative goals and requirements of the act and will rank order them from highest to lowest in terms of their performance.

o The committee shall allocate performance grants to the highest performing districts from a performance fund of $5 million appropriated for this purpose.

o Performance grants would be used to reduce employee health insurance copayments and deductibles, with the goal of the grant to have a meaningful impact in the district.

o However, if JLARC determines that districts and their benefit provides have not made adequate progress, in the judgment of the committee, then the report to the Legislature must contain advantages, disadvantages and recommendations on:

. Why more progress wasn’t made;

. What legislative or agency actions would help remove barriers to improvement;

. Whether school district health insurance purchasing should be through a single consolidated school employee health benefits purchasing plan or through the PEBB; and

. Whether certificated or classified employees, as separate groups, would be better served by purchasing health insurance through a single consolidated school employee health benefits purchasing plan or through participation in PEBB.

 Regarding the penalties, if the OIC determines that a school district has failed to comply with the reporting requirements for two reporting periods, the OSPI is required to limit the school district’s authority to offer health benefits to employees only through the state PEBB system. If the noncompliance in reporting is caused by the benefit provider, the OIC may take enforcement actions under Title 48 of the Revised Code of Washington.

o The data reporting requirements apply to school districts that are self- insured. Failure to comply would result in a loss of self-insured status.

Lawmakers in both chambers said they expected the bill would require some adjustments over the next few years as school districts work with their providers and employees to modify plans and comply with the reporting requirements. That said, proponents said the bill offered a positive step forward to meeting the legislative goals of transparency, equity, affordability, and savings for health benefits provided to school employees.

WSSDA will be working with districts and other education organizations to help explain the bill and legislative expectations, as well as identify concerns and areas for improvement for the 2013 session.

You are receiving this email because you are subscribed to WSSDA's Email information services. To create, modify or cancel a subscription, please use our online request form or contact WSSDA's Sue Brand ([email protected], 360.252.3016). Your request will be processed as soon as possible.